Here’s My Experience With A Side Business. What’s Yours?

Share Button

Recently, a reader wrote to me asking the following:

I would love to know how many of your readers supplement their incomes with side work, especially things like computer support, tutoring or even substitute teaching: intermittent work, where the “product” is their time, and where they have to go out and find customers. Of course, I’d also like to know how it worked out for them.

I have experience with two distinct side businesses, a small computer consulting business and blogging. Here are some of the general observations on these side businesses that might be useful to people considering starting their own side business.

Getting Started
In both of my businesses, I got started on a shoestring – my primary investment was time. I started my computer consulting business by hanging up flyers in the post office and on community bulletin boards. I started blogging using a free blogging service. In both cases, the expenditures were tiny – if I had the capital to invest, I wouldn’t be so interested in a side business like this.

Building The Business
The start of both businesses was very dry. Let’s get that straight right off the bat: if you start out with minimal advertising and no network of people to tap, as I did, the business will start with a very dry period. You won’t have immediate success, period. For the first three months of my consulting business, I advised one couple on what laptop to buy and got $20. For the first two months of my blog, I did not make a single dime, even though I was posting multiple times a day.

It picked up when I started to network. In both cases, though, as soon as I started talking to people in the community and introducing myself, my business, and what I have to offer to them. I started getting involved in my local community to promote my own business, going to a lot of community events, meeting people, shaking hands, and giving out my business card to anyone who seemed remotely interested. For The Simple Dollar, I found people online who were writing on similar topics, sent emails, posted comments, and hung out on messageboards (writing a lot, especially at first, helped too).

Success feeds on success. In both cases, once I got past the initial “hump” of slowness and continually produced good work, the businesses seemed to almost take on a life of their own. The popularity took off for both and soon I was getting business and recognition from people I didn’t know at all and had never made any effort to contact in any way. The key? Customer service. Treat everyone’s input like it’s golden, implement what makes sense, and be sure to let people know when you follow their input. If something is wrong, fix it and don’t sweat the charges or time, because you will be paid back for the effort in the long run.

Taxes
My rule of thumb is that I save $0.50 of every dollar I bring in on these businesses for taxes. That seems incredible at first glance, but it’s true: taxes will eat you alive. I keep this money in a high-interest account and then do my taxes using TurboTax at the end of the year. I save every receipt and full documentation on everything associated with the businesses and I don’t try to play any games with questionable deductions because it’s worth the extra taxes I might pay to avoid a detailed audit.

In short, if you start a side business, do it because you love it and because you have enough skill to make quality output. If you can handle those two things, the business will come. Just be patient.

Do any readers have additional thoughts or experience that they’d like to share?

Share Button
Loading Disqus Comments ...
Loading Facebook Comments ...

19 thoughts on “Here’s My Experience With A Side Business. What’s Yours?

  1. I haven’t done much of the “going out to get customers”, but 2 of my jobs right now would be classified in the computer support & tutoring category. Mine consisted of working with existing companies that have more than they can chew on their own as an independent consultant.

    The tips I have for people in that situation is communication is the key and discuss any decisions with the organization. The computer support position I receive jobs via e-mail from them and promptly send them back an e-mail if I can do the job or not. Also as things come up (eg: repair requires second visit), I contact them to keep them in the loop on decisions. These actions have caused them to send me more and more work. (So much so that I’m dropping tutoring because I’m doing 2-3 nights/week of computer repair that pays higher.)

  2. At the end of January I started a side business through etsy.com, a site that sells only handmade items. As an artist I knew I could be doing more using my creativity to pay down my debt, so I began making handpainted magnets, which I began selling at $2.50 apiece. I’ve mailed them to customers all over the world. Since January I’ve made close to $1,500, with all of it going to debt repayment.

    I highly recommend starting a side business. It’s been nothing but positives for me since I started.

  3. I can personally attest to what a great income stream tutoring can be (especially for math/science, the subjects that ‘scare’ people). I worked as a teaching assistant as an upper year undergraduate and I made more money tutoring (other courses that I wasn’t teaching, watch out for conflict of interest!), and in fewer hours, than I did as a TA. I kept it up for the first couple years of grad school and it paid for my wife’s engagement ring. If you are strong enough in a subject, look for ‘tutor connection’ services at your local college, they’re free and they get you in contact with interested clients. Upper year high school students can be great clients too, parents are typically interested in intensive remedial work to improve marks for college application and they’re often very willing to invest in tutoring. The key is to present yourself professionally, as Trent said, and PREPARE before you go. Ask what topics you’ll be covering, bone up on the subject and have a basic lesson plan in mind when you go in. Ask what textbook the student is using and check it out ahead of time (free at your public or local college library). You can easily earn a few hundred dollars a month, tutoring is great work when you’ve got more time than money (looks great on a resume too).

  4. Trent,

    Great bit about the art of the side business – I think your admission of not making a dime from your blog the first two months is a particularly valuable tidbit. It’s encouraging to hear that other serious (or semi-serious) bloggers may have a rough start…but still achieve success in the long run.

  5. I’ve had similar experiences.

    The quiet time during a dry start is where a lot of people get discouraged. As long as you keep networking and getting the word out there, you eventually reach a critical mass that ramps up your business very quickly.

  6. Great post! I hope you do more post on blogging or start the site you said you might. I’m just starting out and would love to hear more about that topic.

  7. Nice post!
    I run a small software development S-Corporation, started last year, so here is my experience.

    Getting Started: I was doing independent consulting for a while as a side thing. It was nice side income, but I decided to make the best out of it and decided to incorporate (for many different reasons).

    Building The Business: I already had a couple clients before I started it, so the transition wasn’t hard.

    Taxes: Yes, being self-employed entitles you to paying more taxes. Us self-employed pay 15.3% Self-Employment Tax rate. If you’re an employee, you pay only half of that, the other half is paid by your employer.

    Also, I’d add that you should count in time you need for administrative duties. When you’re an employee, all admin work you have to do is deposit your paycheck. It’s completely different thing with running a side business!

    I started recently a blog for software developers on http://www.ivetic.net .I hope that Trent will post more details on how did he start networking with other bloggers.

  8. Just out of curiosity what types of computer consulting services do you offer? I have been doing some side work here and there and would like to turn it into more.

  9. Great article. I had a couple of my own side businesses. Both of them failed. This is not uncommon, and in fact was expected, as something like 2/3 of all new businesses fail. I do however consider myself very lucky in this regard. The comb ined loss of these ventures was about $1,000. Compared to what I learned, an equivelent education (taking classes at the local community college) would have cost at least twice that.

    From my experiences I can say Trent is right on. To build on his statement “treat every input like it’s golden”: I would not have ended as well as I did had I not done that. In my case I listened and tried every suggestion as to where I could find customers. I also found a few people in the same buisiness (google is great for this) and emailed them for advice. Most of the people I talked to declined to help, but one guy wrote me back what ammounted to a manual on making money in the field. This reply, and later exchanges of email, made the difference between getting out almost even and losing everything.

    A few other points folks may wish to consider:

    1. Some companies own all employee’s intellectual property unless otherwise noted. You may wish to discuss this with your boss and get a waiver in writing. My boss is pretty cool about stuff like this, as long as I dont compete with my employer he will write up something. It may seem rediculous, but lawyer prevention is usually a good idea.

    2. If you are going to try and make money from something you do as a hobby, I’d reccomend thinking about this for a while: If you have a bad experience, or have to do some stuff you consider unpleasant related to this work, will it still be enjoyable for you? This is why I don’t do freelance photography. I think it would ruin my experience. (At least for now).

    3. Expect (as in plan on) making nothing at your venture. There are a couple reasons for this. First, any income will be nice and make you excited. Second, experience is gold. All the money you will spend on this venture will at the very least pay off in lessons if you pay attention. The next time, you will know far better how to do this business thing.

  10. My husband and I both freelance in addition to our regular 40- (or 50!) hour-per-week jobs, and my first advice is to adjust your tax withholding on your primary job as “married but withhold at higher single rate” or to have an additional amount taken out of each paycheck or whatever you think is sufficient to handle the additional tax bite. The first year we were freelancing we didn’t do this, and our tax bill was $6000 – it was horrible for us to have to come up with this money. This year, with the additional money already having been taken out of our primary paychecks, we got back $300 (which was what H&R Block charged us to do our – complicated – taxes!). I know that the other (and better) option is to set aside the money for taxes in a high-interest savings account, but we’re not quite that on the ball. :-)

  11. Nice post!
    I run a small software development S-Corporation, I started last year, so here is my experience.

    Getting Started: I was doing independent consulting for a while as a side thing. It was nice side income, but I decided to make the best out of it and decided to incorporate (for many different reasons).

    Building The Business: I already had a couple clients before I started it, so the transition wasn’t hard.

    Taxes: Yes, being self-employed entitles you to paying more taxes. You will pay 15.3% Self-Employment Tax rate. If you’re an employee, you pay only half of that, the other half is paid by your employer.

    Also, I’d add that you should count in time you need for administrative duties. When you’re an employee, all administrative work you have to do is deposit your paycheck in your bank account. It’s completely different thing with running a side business!

  12. Interesting article and great advice.

    In college, I had a small web design business. Essentially, I worked pro bono for non-profit organizations. Of course, this work helped me land my first real job as a teacher, which indirectly led me to my current job as a web developer.

  13. I’m trying to get my own blog going right now, based in large part on Trent’s advice. I’d add one more thing to what he wrote. Just do it!

    Yes, I know it sounds like a Nike commercial, but it’s true. Most of these side business cost nothing more than time and effort. Starting my blog cost me a total of $10 (for the domain name). It’s costing me time but that’s something I have to spend right now and if I think it’s costing me too much time, I’ll stop.

    So stop thinking about it and do it. If you do your research you’ll see that there’s usually very little risk and almost zero upfront investment in one of these side businesses. You lose nothing by trying, you only lose out by sitting back and doing nothing.

    GJ

  14. Hi all. The question was from me — thanks to Trent for his vigilance in protecting my anonymity :-)

    I actually co-started a business years ago, and went through many of the pains some of you described above. We made good money (I should get another small quarterly check in two weeks, and that’s from work we completed nine years back!) but it took a long time to get flowing.

    But the last business was product-oriented (computer games) and the work I’m considering now is service-oriented — consulting, tutoring, etc.

    So the main thing I’m wondering is, can I find enough of these little jobs to bring in a few hundred dollars extra per month? That would be enough to make it worthwhile.

  15. I’ve had great success, but I’ve done so under another person that’s covered our insurance and liabilities.

    I just handle computer work on the side and the pay is very good.

  16. I also do a side business…I give tution to level 10…I want learn low cost way of advertising…Can some body help me for this local business.

  17. Great info on the side business. I completely agree that the beginning is the hardest. I just started my blog and it’s quite hard to get traffic my way. I would love to read more on blogging tips…thanks

  18. I had a few ideas for side businesses that required a truck and so I bought the truck and pursued the businesses. They did okay, but not well enough to justify the ongoing expense of the truck (storage, diesel, maintenance, insurance)but the tax advantages like depreciation helped a lot. Eventually my life changed, got a girlfriend, and the sidebusinesses ended. I have become convinced that the huge failure rate of small businesses (like the “2/3″ quoted above) is related more to experimentation and justifying our hobbies than to the difficulty of starting a business. We start them and then stop them for a million reasons that have nothing to do with profitability.

  19. unfortunately, taxes and government rules and regulations make starting a small biz more difficult than ever. some states are worse than others. The state and county I am in, it’s horrible… taxes are high and regulations are many. You would think that govt would simplify the process so more people can do it and they can get more money, but that’s not the case. No wonder so many businesses leave the USA. They can’t afford to operate here

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>